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US | NZ Council Newsletter
Presented by the US | NZ CouncilOctober 30, 2015

Trade

Trans-Pacific Partnership: the case for trade
October 30, 2015

Following the conclusion of the Trans-Pacific Partnership by twelve Pacific rim countries, debates about the costs and benefits of trade liberalization are intensifying. The early leaders in the U.S. presidential campaign – both the Republican Donald Trump and the Democrat Hillary Clinton – have expressed opposition to the TPP, though as secretary of state, Clinton called it the “the gold standard of trade deals.”

White House spokesman Josh Earnest said Democrats and Republicans are going to have to work together to make progress and President Obama is hopeful that House Speaker Paul Ryan can be counted on again to win congressional approval of TPP.

The Obama administration outlined for Congress this week its plan to tackle the thorny issue of transparency in future trade negotiations; many opposed to the TPP had criticized its alleged lack of transparency during the negotiations. The trade consultation and engagement guidelines transmitted by the Office of the U.S. Trade Representative are a requirement of the recently-approved fast track trade promotion authority law, which required their release 120 days after the legislation was enacted. The guidelines most notably allow, for the first time, the personal staff, with appropriate security clearances of members sitting on the Ways and Means and Finance Committees, to independently review the negotiating text of an agreement.

Fresh discontent is surfacing over the Trans-Pacific Partnership trade deal that Canada signed in the dying days of Stephen Harper’s government – uneasiness that Justin Trudeau’s Liberals must confront as the job of ratifying the accord falls to them. Mayors representing twenty Ontario cities, from Oshawa to Windsor, with a significant number of auto-sector jobs called on Mr. Trudeau, the prime-minister-designate, to protect their industry from being sideswiped by the TPP, the largest trade deal Canada has ever undertaken.

Japan’s high-cost farmers, sheltered by prohibitive import tariffs, might appear to be most at risk from a trans-Pacific free-trade deal agreed this month, but they are instead making an unlikely push to export more of their pricy produce. The latest figures show that Japan’s agricultural sector exports only about five percent of its output, but Prime Minister Shinzo Abe sees the Trans-Pacific Partnership (TPP) deal, reached in Atlanta on Oct. 5, as an opportunity, not a threat.

Sell the New Zealand Dollar say TD Securities and BMZ
October 29, 2015

Policy makers desperately need a weaker currency to ensure the country’s exports remain competitively priced on the global market. The rally in the NZ dollar has gone too far argue TD Securities, a leading global financial services provider. The New Zealand dollar has enjoyed a period of strength through September and October, indeed the NZD was the best performing currency in G10.

For the first time in any trade agreement, the Trans-Pacific Partnership includes rules focused on trade barriers that disproportionately challenge small firms. As Congress evaluates the details of what could be the world’s biggest trade deal yet in the coming months, one of the most crucial components that often gets overlooked is the agreement’s focus on small and medium-sized businesses. The Trans-Pacific Partnership represents an unparalleled opportunity for the global economy. The deal is the largest and most substantial free trade agreement in history, connecting twelve global economies, 40% of GDP and 800 million consumers across the Americas and the Asia-Pacific region.

The House acted with rare bipartisanship to approve legislation that would reopen the federal Export-Import Bank, after a debate that underscored the split between the party’s traditional pro-business members and ascendant free-market conservatives who are suspicious of big corporations. The lopsided final vote of 313 to 118 belied that split, as a majority of Republicans joined with all but one Democrat to reauthorize the 81-year-old bank agency, but many waited until the bill’s passage was assured before voting. Late Monday, one fourth of Republicans supported a vote — and an unusual legislative move — that made the final vote possible over the opposition of many party leaders.

U.S. officials to work with Congress on Pacific trade pact timing
October 27, 2015

U.S. officials say they will work with Congress to find a window for lawmakers to consider the sweeping Pacific trade pact and warned that rejecting the deal would raise questions about America’s leadership in the region. U.S. Trade Representative Michael Froman said he is confident of winning political support for the Trans-Pacific Partnership (TPP) deal sealed with eleven trading partners earlier this month, which drew a mixed initial response from Capitol Hill.

The sweeping Pacific trade agreement completed this month gives banks an added international legal protection that some congressional critics warn could lead to more challenges to Wall Street regulations. U.S. officials play down the new protections for financial firms, saying the Trans-Pacific Partnership also contains several new legal provisions that limit the ability of banks to challenge American financial rules. U.S. officials say the language ensures U.S. banks get the full protection of international law, and could help them challenge arbitrary or discriminatory regulations in other countries within the trade bloc. The provision, which guarantees banks a “minimum standard of treatment,” is part of a broader overhaul the Obama administration has sought of international arbitration to prevent corporations from abusing the system in the TPP, known as investor-state dispute settlement.

New Zealand’s trade report for September has come in below expectations. According to Statistics New Zealand, exports fell slightly to $3.69 billion from $3.73 billion in August, marking the lowest monthly export total seen since January. While exports slipped, imports ballooned to $4.91 billion, an increase above the $4.77 billion level of August, the largest recorded monthly figure in over twelve months. As a result, the monthly trade deficit grew to $1.22 billion, a 12-month high.

Ohio Rep. Pat Tiberi has sent a letter to the entire Ways and Means Committee, sharing his “vision” for what the powerful tax-writing committee would do under Paul Ryan’s speakership. Tiberi, a close ally of the departing speaker, John Boehner, is facing Texas Rep. Kevin Brady for the gavel. The steering committee will choose between the two Republicans in the coming weeks. Brady is more senior than Tiberi, but Texans chair six other House committees.

Paul Ryan’s bid for House Speaker opens top job for Kevin Brady on Ways and Means
October 26, 2015

Texas Republican Kevin Brady announced Monday he will move to take Paul Ryan’s post as chairman of the influential Ways and Means Committee, which could come open later this week with Ryan’s expected election as House Speaker. If successful, Brady’s move would make him a high-profile partner with Ryan in formulating the GOP’s version of tax reform in the upcoming 2016 election year.

Paul Ryan’s potential run for speaker would put a strongly pro-trade lawmaker in the most powerful position in the House, where he could use his credibility with conservative lawmakers — who have often broken with retiring Speaker John Boehner — to increase the likelihood of approving the Trans-Pacific Partnership, if he ultimately supports the deal.

Hillary Clinton has been seriously considering HUD Secretary Julian Castro as a potential running mate in the 2016 election. She may be dismayed to hear, then, that he just distanced himself from her on trade and admitted she flipped flopped on the issue.

New Zealand

The flightless kiwi bird with green lasers shooting from its eyes has been ruled out. As has the woolly sheep with red stars for its eyes. The more than 10,000 designs submitted for New Zealand’s new flag have been whittled down to five, four of which feature variations on a fern, an indigenous plant of great symbolism in the native Maori culture and the logo of the national rugby team. The idea of replacing New Zealand’s flag, a blue banner with Britain’s Union Jack in the upper left quadrant and the four stars of the Southern Cross in red on the right, has percolated for decades. Prime Minister Key promised last year that if he won the September election, he would hold a nationwide referendum on a new flag. There were also practical reasons. He often cites Canada, which in 1965 changed its flag to the instantly recognizable maple leaf, as a model. Canada, like New Zealand, remains a member of the Commonwealth and a constitutional monarchy under Queen Elizabeth II.

The Ministry for the Environment has blasted a negative report by the Organization for Economic Co-operation and Development (OECD) which had given New Zealand a poor environmental rating. The Ministry for the Environment said the OECD had its facts wrong and had ignored information given to it almost a year ago. It said it was not given the chance to review the report before it was published and planned to urgently follow up with the OECD. For example, it added that all 67 local authorities in New Zealand offered curbside or drop-off recycling collection services, taking glass, metal, paper and plastics.

Sustainably-produced wines have made their mark at the 40th annual Air New Zealand Wine Awards, reflecting a growing interest in how Kiwi wines are made. A record 99.7 per cent of all 1424 wines entered in this year’s awards show have been produced under the New Zealand Winegrowers (NZW) Sustainable Winegrowing New Zealand certification program, or another recognized organic or biodynamic certification. Sustainable Winegrowing New Zealand general manager Philip Manson said he was impressed by the number of sustainably-produced wines entered in this year’s competition.

New Zealand is been ranked second in the world for wealth in an annual report on 200 countries. The Credit Suisse report shows the richest one percent now own 50 percent of the entire world’s wealth. The report places New Zealand second behind only Switzerland. Greg Fleming, who worked with Credit Suisse in Zurich for the past nine years, recently returned to New Zealand, where he is now research strategist for First New Zealand Capital.

Business

Borrowers have to wait as Reserve Bank of NZ leaves interest rate at 2.75 pc
October 29, 2015
With mortgage rates already low, more interest rate cuts are on the horizon – but not yet. On Thursday, New Zealand’s central bank opted to leave the benchmark official cash rate (OCR), which strongly influences mortgage and deposit rates, unchanged at 2.75 per cent. The Reserve Bank also fired a warning shot at currency markets about the recent rise in the kiwi dollar over the last six weeks. While the Reserve Bank expected a lower dollar would boost inflation, the recent rise “if sustained” could dampen activity in the economy and lower inflation.

Chinese conglomerate Shanghai Pengxin Group has been on a buying spree ever since it entered New Zealand in 2011. The food giant has purchased 29 farms through local subsidiaries to become the country’s third largest dairy producer. Pengxin’s expansion plans in New Zealand seemed to be going smoothly until last month when the government unexpectedly rejected its $56m (£36m) bid to buy the sprawling and iconic Lochinver farm. The move came as a big surprise, considering the sale had been approved by the country’s foreign investment body. Now, Pengxin has pulled the plug on another deal to buy a group of farms 3,300 hectares in size, saying it was “not confident” of approval from the government

Sports

New Zealand v Australia: All Blacks unchanged for World Cup final
October 29, 2015

Defending champions New Zealand have named an unchanged side for Saturday’s World Cup final against Australia. New Zealand’s matchday squad of 23 has a combined 1,339 caps, with five of the players set to play their final matches for the All Blacks. Captain Richie McCaw is expected to call time on his record-breaking Test career after the game, although he insisted he has yet to make a decision on his future.

In the final moments before Saturday’s Rugby World Cup semifinal, the New Zealand All Blacks will pound their forearms and slap their thighs in unison, bellowing their way through the sport’s proudest ritual, a Maori dance known as the haka. And while the All Blacks honor their heritage, their opponents from South Africa will take part in another time-honored tradition: just standing there.